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Potential S&P 500 Communication Sector SPDR (XLC) Trade Has 3.50% Downside Protection

Jan 11, 2019 ( via COMTEX) --

S&P 500 Communication Sector SPDR (<a href="">XLC</a>) is a good candidate for a covered call at the $44 level. The Feb 15, 2019 call at that price should fetch a credit of about $1.55, which means the entire position has a net debit of about $42.72. This trade has 2.52% downside protection. Another option would be to buy the XLC Jan 17, 2020 $22 call instead of holding a long position in the stock. This lowers the net debit to $21.14, but the position only has 2.52% downside protection. Technical indicators for the stock are bearish and S&P 500 Communication Sector SPDR has a 52-week low of $38.97 and 52-week high of $52.11.

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